* Australian dollar climbs on rising commodity prices
* Brent trading volume surges as oil tops $73
* Will higher raw materials prices douse the recovery?
By Kevin Plumberg
HONG KONG, June 30 (Reuters) - Asian stocks and the
Australian dollar rose on the last day of the second quarter,
as investors kept adding to bets global economic activity is
rebounding, having driven Chinese shares to the highest in a
year.
The U.S. dollar slipped as momentum kept dealers rolling
out of trades based on safety after a 7 percent drop on the
quarter, keeping commodity prices supported. Oil prices rose
above $73 a barrel, to new highs for the year.
Emerging markets have been the big winner so far this year,
with the MSCI emerging markets equities index <.MSCIEF> up 32
percent so far in 2009 compared to a 6 percent rise on the
all-country world index <.MIWD00000PUS>.
A tremendous shift by investors out of cash and
low-yielding money market instruments into riskier assets,
particularly in Asia, has been driving equity valuations and
currencies in the region higher.
However, the third quarter could be a time of reckoning if
higher raw materials prices snuff out a nascent recovery.
"Just how higher oil prices are a boon to the global
economy when consumers are struggling to keep jobs and make
payment on negative equity housing loans is a mystery. We are
confident that threats to risk appetite and risk assets point
clearly toward potential reversal, not extension of gains,"
said Patrick Bennett, Asia foreign exchange and rates
strategist with Societe Generale said in a note.
So far this year, Chinese and Indian stock markets have
been the hottest in the region.
The Shanghai composite <> was up 0.3 percent on the
day to the highest since June 2008, and has risen 63 percent so
far this year.
India's BSE index <> has gained 52 percent in the
first half, with most of it won after a decisive election
victory by a Congress-led coalition in May.
Japan's Nikkei share average <> rose 1.9 percent, with
firms in the technology sector giving a boost to the index.
Valuation of the Nikkei on a price-to-book basis has jumped to
around 1.3 times, having spent the first quarter below a
multiple of one.
That is still well below the average of the last decade of
1.9 times.
Hong Kong's Hang Seng index <> climbed 1.5 percent,
helped by a 5.8 percent jump in shares of refiner Sinopec
<0386.HK> after China unexpectedly lifted domestic gasoline and
diesel prices to their highest ever. []
Oil rose sharply to 8-month highs, though a lack of news
suggested dealers were focussed on quarter-end activity.
U.S. crude for August delivery <CLc1> rose to an
eight-month high of $73.38 a barrel, but later cooled to trade
at $72.09, up $1.60 on the day.
London Brent <LCOc1>, where trading volume in the front
month contract surged much higher than normal, led the rally,
gaining $1.93 a barrel to $72.92.
"This could be end of quarter movement, and traders are
trying to push prices higher and then selling before closing
their books," said Mark Pervan, senior commodity strategist
with ANZ Bank.
Overnight a weakening U.S. dollar helped to prop up
commodity prices and the dollar continued falling in Asian
hours.
The ICE Futures U.S. dollar index fell 0.3 percent <.DXY>,
locked in a downtrend since March.
The Australian dollar was one of the biggest outperforming
currencies on Tuesday, up 0.6 percent to $0.8120 <AUD=>.
Bets on further strength in the Australian dollar have
become significant enough to suggest a near-term move lower,
though it has not experienced a loss of momentum in its rise
against the U.S. dollar to squeeze short-term investors, said
strategists with Banc of America Securities-Merrill Lynch in a
research note.
(Additional reporting by Fayen Wong in PERTH)
(Editing by Kazunori Takada)
